"I was an investor in Daily News" – Mawere tells Nyarota

Significantly the author sought to make a case that this circle was generally corrupt and, therefore, the Prime Minister of Zimbabwe, Rt. Hon M. Tsvangirai should be accordingly warned against associating himself with the allegedly corrupt.

Chihombori’s friends but more significantly the author sought to make a case that this circle was generally corrupt and, therefore, the Prime Minister of Zimbabwe, Rt. Hon M. Tsvangirai should be accordingly warned against associating himself with the allegedly corrupt.

This is what was said about my investment holding company, Africa Resources Limited (ARL), a vehicle through which the acquisition of SMM Holdings (Private) Limited (SMM) was effected: "ARL became one of the most powerful and influential corporations in Zimbabwe’s history, amid allegations that it had received a helping hand from Zanu-PF, with Defence Minister Emmerson Mnangagwa being fingered as Mawere’s god-father in the party".Any reader of the above, will come to the inescapable conclusion that ARL’s success was causally linked to political patronage and the person responsible for connecting the company with the state was Hon. Mnangagwa.

In the world of the mafia, a god-father plays a central role in the administration and control of family business and more significantly in using any means necessary to promote and protect the interests of the family even if it means breaking the law. Having framed me as a beneficiary of mafia-type access and protection, it is clear that the author sought to advance his own hypothesis that Dr. Chihombori is just one of many beneficiaries of similar nefarious activities.

If Mawere is or was connected to Mnangagwa, then surely to the extent that Dr. Chihombori was also connected with Mawere through her appointment to the founding board of First Banking Corporation, then it follows that in reality Chihombori was really a creature of ZANU-PF and was effectively a puppet of Mnangagwa and by default of ZANU-PF.

After all in the eyes of the author, ARL was not a company but a creation of ZANU-PF with me as an mere agent.Having set the frame for a generally corrupt relationship between the actors, one can understand why the author would keep on the story using my name as a central player. At the core of the allegations that he has made is the purportedly misappropriation of funds provided by IFC to help finance a project sponsored and promoted by Chihombori.

It is being alleged that the purpose of the project which was to modernize and expand the hospital facilities was not genuine. In fact, it is being alleged that it was part of a corrupt scheme to use the proceeds of the IFC loan to help fund my company.

In fact, the title of Mr. Nyarota’s latest article on the continuing story whose ultimate objective is to expose Chihombori and her alleged accomplices in an alleged corrupt scheme involving the World Bank, is revealing as it is intended to create the impression that the application of the World Bank funds remains unexplained and, therefore, there is a story worth pursuing.

Mr. Nyarota writes: "World Bank funds remains unexplained" and in the article Link he makes the case that my refusal to respond to a list of questions that I will address below represents an admission of guilt and is tantamount to a cover up that warrants his continued pursuit allegedly in the name of national interest and transparency.The questions that were posed to Chihombori are as set out below:

1. Our representative visited Kwekwe and Redcliff over the weekend. He says: "The hospital at Torwood shows evidence of dereliction, the magnitude of which could not have occurred only over the past ten years. There are no signs of renovation anywhere on the complex. The building itself is run down as are its environs. Such state of dereliction could not have happened in the 10 years since 2000. Can you comment? The questions above relate to a project that I was never directly or indirectly involved in.

In the article entitled: "Nyarota was a guest at my dinner table" Link, it is stated that: "The total cost of the ambitious expansion project was US$1.61 million and IFC was requested to provide quasi-equity of US$750 000. IFC approved funding for BMC on June 30, 1999 under Project 9586.

The funds were released on August 2, 2000" implying that IFC’s contribution was only 47% of the project cost. It falls to reason that the balance of the project cost or 53% had to be provided from other sources which could only be from the shareholders of the project company.

I cannot comment on the application of funds as this is a matter between the company concerned and its stakeholders including IFC. If as alleged, the project was not executed as contemplated, this would not have anything to do with me as I was never an interested party in the project.

2. In the IFC project document the head office of Bell Medical Centers (Private) Limited is said to be in Harare. The Harare telephone directory does not list such a company. Please clarify. This would naturally be a matter between IFC and its client, BMC. It is not clear from the question whether the project is still active in the books of IFC.

Also it is not explained why the absence of a contact address in the telephone directory would be important to third parties. It may very well be the case that the company changed its address and I would not read much into this unless there is something I am not getting from the question.

3. The project agreement says there would be a requirement to install new and up-to-date equipment, an in-house pharmacy, a laboratory, a radiology department, upgrading operating theatres and the kitchens. All this does not seem to have been done. Please explain. Once again, as a person that was not involved in the project, I have no comment. However, all I can say is that this would be a matter between the financing institution and the borrower.

Having worked for IFC, I would be surprised if the shareholder was not required to provide security for the loan to IFC. If this was the case, then IFC would have been secure in the knowledge that if the project was not implemented as envisaged they would look to the controlling shareholder to make good on the obligations.

What I do not get from your investigations is whether in fact there is an issue between IFC and Chihombori and I would assume if there is an issue the courts would be competent to adjudicate on the matter and naturally this would allow the general public to be involved in a matter that should ordinarily be private and confidential to the contracting parties.

4. Out of the $750 000 grant from World Bank through IFC how much was actually invested in the Kwekwe/Redcliff projects. This is a matter between the contracting parties and, therefore, irrelevant to me.

5. The hospital at most attends to about three patients a week and goes for weeks without attending to anyone. Is this consistent with original projections? This is a matter for which I have no interest to know. As a general observer of the situation in Zimbabwe over the material time, all I can say is that capacity utilization has been adversely affected by the economic and political crisis. I would assume that BMC would also not be immune from the impact.

6. The buildings at the Redcliff Medical Center are run-down. Our information is that although the centre is fully equipped with modern theatre and laundry equipment the equipment was, in fact, inherited from Zisco. This may very well be the case but I fail to see why I should be involved in this matter. If the equipment belonged to Zisco previously then surely someone must have purchased such equipment. Why would this be a matter of concern to you or the general public?

7. The total project cost of your Midlands project was US$1.61 million with IFC providing US$0.750 million requested by you as quasi-equity. There is no evidence whatsoever that the IFC money was used for its intended purposes. So what happened to the IFC funds? This can only be addressed by the people with the knowledge about the project.

However, what is not asked is if as alleged the funds were not applied for the purpose then surely the equipment would have been repossessed by the lender as this would have formed part of the security. If the equipment is still in the possession of BMC then one can assume that funds were indeed used to purchase the equipment either from Zisco or third parties.

8. Our investigations have revealed that the ZISCO managing director who instituted the sale of ZISCO’s non-core assets had foreseen that the medical facilities had no future. Today the hospital admits about three pregnant women per week. He sought to offload the facilities using anyone gullible enough to invest money in them. Please comment.

If as alleged ZISCO had come to the conclusion that the medical facilities had no future, then surely this would be a matter for the purchaser to consider. What we know as fact is that the facilities were sold and contracting parties are not the ones complaining about the exchange of value rather it is third parties who want to prove a point that this represents corruption.

9. We are seeking to establish whether you obtained funds from the World Bank with no intention to use those funds in upgrading facilities that you might also have realised had no future. I cannot comment as the state of mind of the players at the time of the transaction is not my business.

10. The suggestion here is that you then invested the IFC funds in ARL. You seem to misunderstand the sequence of events. ARL was established in 1995. ARL purchased SMM from T & N in March 1996. In late 1996, a special purpose vehicle called Africa Resources Investment Limited (ARIL) and not ARL was incorporated in South Africa as a close-end vehicle through which non resident Zimbabweans could invest in Zimbabwe.

The offer for investment in ARIL closed in July 1997. From your investigations, you will have established that BMC approached IFC in 1999 or two years after the close of the offer meaning that the two transactions could not be connected. ARL never solicited for investment from anyone and remains a company incorporated under the laws of the British Virgin Island that is solely beneficially owned by me.

11. In a video posted on the website of Mr Mutumwa Mawere you are shown as you speak in an interview at a round-table organised in Washington in December 1996 for potential investors in ARL. You speak confidently to the reporter and say: "I am going to invest. I don’t know what everybody else is doing, but I am going to invest." How much did you eventually invest in ARL? The investment was meant for ARIL and not ARL. The offer closed in July 1997.

12. At this time Mr Mawere had just left the IFC to launch ARL. Three years later you approached IFC with an application for a $750 000 grant. It appears there is no evidence you invested the money in the intended project in Kwekwe/Redcliff. But by this time your relationship with Mr Mawere had strengthened so much that when he opened a bank in Zimbabwe you were appointed to the board of directors. Is this all coincidence? I did not leave IFC to launch ARL. ARL was established before I left IFC.

My decision to resign from IFC was not connected to the investment fund initiative that I got involved in as a response to many Zimbabweans in the diaspora who were keen to invest in the country of their birth. ARIL was, therefore, established to provide such mechanism for people to invest and in so doing pool their resources together. There was no intention for ARIL to be an exclusive fundraiser for any of my own investments but it could take advantage of any value adding opportunities that ARL may offer.

13. In an article published in The Zimbabwe Times on June 23, 2009, Mr Mawere writes this of you: "The connection between Chihombori and I is not a secret. Without the encouragement of people like Chihombori, I would not have done the kind of things that I now stand credited for." What is your understanding of this statement? I did write this to demonstrate that I was encouraged by many to seriously think of using the SMM platform to diversify into other enterprises including banking.

If I was a puppet of ZANU-PF and an agent of Mnangagwa, how is it possible that I would have been given the latitude to invest in the Daily News? You state accurately that you approached me personally but you forget to mention that at no stage did I say that I will wait for Mnangagwa or for that matter ZANU-PF to tell me what to do.

If I could be a principal in the affairs of the Daily News then surely you must give me credit for the decisions I have made in my life.I have respected you as a person and I will continue to do so but you also have to reflect on your own approach to life. If I held you in contempt there would have been no point in discussing issues of mutual interest let alone investments.

When you and Mr. Mbanga came up with the idea of setting up the Daily News we all saw this as a progressive step in building a plural and tolerant society. We were part of the solution and when Chihombori also responded by looking at Zimbabwe as an investment destination we also saw this as a positive step.You make reference to Hon. Mnangagwa’s presentation at the ARIL roadshow in the USA.

You will appreciate that the meeting in the USA was meant to counter the prevailing logic that governments can create entrepreneurs and dishing out credit could in and out of itself be a catalyst for development. Hon. Mnangagwa did acknowledge that interventions by the state in providing credit to SMMEs through SEDCO, IDC and ZDB had not resulted in any meaningful supply response.

What was evident then as it is still now is that many Zimbabwean born persons who had chosen to adopt other countries as a home had done exceptionally well and this phenomenon needed to be understood by Zimbabwean policy makers who in their own wisdom have failed to appreciate why people would choose to flee the country in search of a brighter future if Zimbabwe offered the same.

You will appreciate that the thinking of Mnangagwa and many policy makers is no different. Giving money to people as credit without looking at what is needed to spur supply response will not help. You can inherit a fortune and lose it implying that no business will succeed just because it has access to government funds.

A progressive nation can attract good minds and it is self evident that nation building requires more than just credit availability. I appreciate that you would like people to believe that ARL succeeded merely because of allegations that the acquisition was facilitated by a government guarantee when the facts demonstrate otherwise.